Halifax: Average house prices hit new record high

Warren Lewis

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7th August 2018

The latest data and analysis from Halifax has revealed that house prices in the three months to July increased by 3.3% against the same period a year earlier with the average house price rising to hit a new record of £230,280.

Halifax revealed that on a monthly basis, prices rose by 1.4% in July, while in the latest quarter (May-July) prices were 1.3% higher than in the preceding three months (February-April 2018)

Fall in housing activity in June

UK home sales fell by 3% to 96,340 in June. In the three months to June sales were unchanged from the previous three months. The volume of residential transactions has been broadly flat over the past year and is likely to remain so in the coming months. (Source: HMRC, seasonally-adjusted figures)

Mortgage approvals rise again for second successive month

Bank of England industry-wide figures show that the number of mortgages approved to finance house purchases – a leading indicator of completed house sales – grew by 1.4% between May and June to 65,619 – the second highest monthly level this year. There are some encouraging signs with mortgage approvals up 4.1% since April, however, demand remains weak. (Source: Bank of England, seasonally-adjusted figures)

Housing activity remains steady

New buyer enquiries have been flat or falling for 18 consecutive months, whilst agreed sales deteriorated between May and June. On past evidence, both sets of data point to mortgage approvals holding broadly flat until the end of 2018. On the supply side, new instructions, which had fallen for 26 consecutive months have now edged up in the past two months. (Source: Royal Institution of Chartered Surveyors’ (RICS) monthly report)

Russell Galley, Managing Director, Halifax, said: “House prices picked up in July, with the annual rate of growth rising from 1.8% in June to 3.3% in July, the largest increase since last November. The average house price is now £230,280, the highest on record. House prices in the three months to July were 1.3% higher than in the previous quarter, the fastest quarterly increase, again, since November.

While the quarterly and annual rates of house price growth have improved, housing activity remains soft. Despite the recent modest improvement in mortgage approvals, the latest survey data for new buyer enquiries and agreed sales suggest that approvals will remain broadly flat until the end of the year.

In contrast, the labour market remains robust, with the numbers of people in employment rising by 137,000 in the three months to May with much of the job creation driven by a rise in full-time employment. Pressures on household finances are also easing as growth in average earnings continues to rise at a faster rate than consumer prices. With regards to the recent rise in the Bank of England Base Rate, we do not anticipate that this will have a significant effect on either mortgage affordability or transaction volumes.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "House prices experienced a rebound in July but this was mainly due to shortage of stock and continuing low mortgage rates, as we have found on the high street that many buyers have already factored in the increase in interest rates. It is almost as if the north/south divide is working in reverse with more activity outside rather than inside the capital.

There is still no clear pattern to the market after June saw the slowest growth for five years. Viewings are up but it is hard to obtain commitment as political and economic uncertainty remain.

We are looking forward to a reasonably active summer and autumn period as fewer but more serious buyers come to terms with changed market conditions.

Jonathan Harris, director of mortgage broker Anderson Harris, says: "Mortgage approvals continue to be strong and we don’t expect this month’s interest rate rise on its own to have too much of an impact. However, it may cause some nervousness going forward as buyers worry about the possibility of future rate rises. It is no surprise then that fixed-rate mortgages continue to be by far the most popular product as borrowers look to protect themselves against future uncertainty."

Mark Readings, Founder and Managing Director of Online Estate Agency, House Network, said: "The UK property market remains resilient despite political uncertainty. The second half of the year is proving to be more positive, with many areas continuing to see moderate growth. At House Network, we are seeing record levels of market appraisals being untaken which would suggest homeowners are positive about the market as they develop Brexit fatigue.

Following the recent moderate rate hike to 0.75 by the BOE, mortgage rates still remain low and this small increase is unlikely to put anyone off buying a property as rental prices continue to increase."

Russell Quirk, founder and CEO of Emoov.co.uk, commented: “While these house price reports cover the whole of the UK and provide us with an average which, of course, can conceal regional idiosyncrasies, the current trajectory of the UK property market is one that favours homeowners both existing and aspiring.

In fact, this could be described as house price growth utopia as any news of an overly excessive increase is criticised as bad for home buyers, while a fall is met with toxicity by those that already own a home. Many usual voices will be quick to highlight a ‘lacklustre property landscape’, but the highest increase in prices since November speaks for itself and is still palatable, if not absolutely ideal for both camps.

Prices are up annually and while a slightly weary market hasn’t narrowed the unaffordability gap over the last year or two, it has at least stalled it from widening somewhat.”

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